This issue of the Price Monitoring Bulletin is prepared based on the operational daily food price data collected by the National Statistics Committee from 18 markets across the country and disaggregated at province level as the average value (Chuy province - Tokmok, Kara-Balta; Osh province - Osh, Uzgen, Kara-Suu and Nookat; Talas province - Talas and Manas; Naryn province - Naryn and Chaek; Batken province - Batken and Isfana; Jalal-Abad province - Jalal-Abad, Toktogul and Kerben; Yssyk-Kul province - Karakol and Balykchy; and Bishkek city). This is a secondary data analysis.
SITUATION UPDATE: Since March 2020, the COVID-19 global pandemic and its resulting negative impacts on the global economy have led to a recession in the economies of many countries, including the Kyrgyz Republic. The situation in regard to COVID-19 remained stable with 107 COVID-19 cases on 27 January. In 2020 the Kyrgyz Republic’s GDP decreased by 8.6 percent totalling 598.3 billion Kyrgyz soms. Negative trends were observed in the construction, wholesale and retail trade economic sectors. The highest share of GDP accounted for industry (21.1 percent), manufacturing industry (17 percent), trade (16.2 percent) and agriculture (13.5 percent). The Consumer Price Index, which measures price inflation, increased by 9.7 percent for all goods and services and by 17.3 percent for staple foods (cereals, meat, fish, milk and dairy products, fruits and vegetables). At the same time, the annual agriculture production increased by 4.6 percent for wheat, by 9.5 percent for barley, by 6.4 percent for melons and by 3.2 percent for berries and fruits, while the rest crops production decreased. The Government continues to monitor and stabilize food markets across the country through price controls on 11 essential food items and regulating import and export volumes.
The following section discusses the average prices for the two weeks from 13 to 27 January 2021 in comparison to the previous two weeks, the monthly average of February 2020 (before the COVID-19 outbreak began in the country), the previous month’s average (December 2020) and the monthly average in January 2020. The weekly monitoring of food prices revealed the fluctuations of several commodities:
WHEAT: During the weeks from 13 to 27 January 2021, the national retail prices of wheat increased by 1 percent from the previous two weeks’ levels, with an average price of 23.87 KGS/Kg. As of 27 January 2021, the highest price of wheat was observed in Bishkek city (25 KGS/Kg) and the lowest price was in Naryn province (16 KGS/Kg). Globally, higher cereals prices were driven by lower production forecasts in major exporting countries, new and rumoured export restrictions, and export wheat taxes in some major producing countries. Wheat prices rose in most major exporting countries in December and early January and reflect news of export restrictions in Russia. Prices increased by 3 percent compared to December 2020, by 27 percent higher compared to January 2020, and continued to be higher than normal annual price fluctuations, within 15 percent of the benchmark.
POTATOES: The national retail prices of potatoes continued to grow by another 2 percent from the previous two weeks’ levels, reaching a national average of 31.26 KGS/Kg. As of 27 January 2021, the highest price was observed in Jalal-Abad province (33 KGS/Kg), while the lowest price was in Talas province (26 KGS/Kg).
Compared to December 2020 and February 2020, prices were 6 percent and 45 percent higher, respectively. The price was 50 percent higher compared to January 2020, which was significantly higher than normal seasonal price fluctuations.
OIL (COOKING): From 13 to 27 January 2021, the national retail prices of vegetable oil rose by another 1 percent from the previous two weeks’ levels (151 KGS/l), reaching the highest value of all time. As of 27 January 2021, the highest price was in Naryn province (159 KGS/l) and the lowest was in Yssyk-Kul province (140 KGS/l). The Kyrgyz Republic has a high import dependency on vegetable oil due to its low internal production and its low capacity for the processing of oil seeds.
The increasing trend of vegetable oil prices was caused by the growing export prices in the Russian Federation and Kazakhstan, attributed to unfavourable weather conditions, and a consequently lower harvest. Compared to December 2020 and January 2020, the prices were 5 percent and 59 percent higher, respectively, an increase above normal annual price fluctuations.
SUGAR: The national retail prices of sugar remained stable from the previous two weeks’ levels, at an average price of 54.64 KGS/Kg. The recent increase in sugar prices was in line with global trends, as historically proven by the positive correlation between global and national prices. Globally, sugar prices increased in 2020 due to prospects of a lower sugar output in both Brazil and India, the two largest sugar-producing countries, caused by below average rainfalls. As of 27 January 2021, the highest price was observed in Jalal-Abad province (58 KGS/Kg), while the lowest price was in Chuy province (53 KGS/Kg). The prices of sugar were 1 percent and 33 percent higher than December 2020 and January 2020 levels, respectively, an increase significantly higher than normal annual price fluctuations.
MEAT (BEEF and MUTTON): During the weeks from 13 to 27 January 2021, the national retail prices of meat remained stable for beef and increased by another 1 percent for mutton compared to the previous two week’s levels, leading to an average price of 439.95 KGS/Kg for beef and 429.16 KGS/Kg for mutton. As of 27 January 2021, the highest prices for beef were observed in Bishkek city at 448 KGS/Kg and for mutton in Batken province at 450 KGS/Kg, respectively. The late increase in the prices of meat in Kyrgyzstan was caused by the restriction imposed by Kazakhstan on the export of meat and livestock, which boosted the demand from Uzbekistan and encouraged Kyrgyzstan to increase exports to Uzbekistan. The prices for beef and mutton both increased by 1 percent and 5 percent, respectively, compared to December 2020 levels and by 27 percent and 38 percent, respectively, compared to January 2020, an increase above normal annual price fluctuations.
EGGS: The national retail price of eggs increased by 2 percent from the previous weeks’ levels, reaching 103.45 KGS/10 pcs. The increasing trend of egg prices was caused by the growing export prices in Kazakhstan, attributed to unfavourable seasonal conditions and the instability of the currency exchange. As of 27 January 2021, the highest price was observed in Talas province (118 KGS/10 pcs) and the lowest in Batken province (102 KGS/10 pcs). The price of eggs was 12 percent and 36 percent higher compared to December 2020 and January 2020, respectively. The prices were significantly higher than normal annual price fluctuations.
EXCHANGE RATE: During the two weeks from 13 to 27 January 2021, the Kyrgyz som depreciated from 83.78 KGS to 84.8 KGS per 1 USD, the Russian ruble also depreciated from 74.27 RUB to 75.64 RUB per 1 USD and the Kazakh tenge depreciated from 420 to 422 KZT per 1 USD. However, these currencies depreciated by 21 percent, 13 percent and 11 percent, respectively, against the US dollar since the beginning of March 2020, according to the exchange rate of the National Bank. Lower remittance levels were among the factors affecting the weakening of the external position of the Kyrgyz som. Currency movements are one of the main driving forces of the retail prices of imported basic food commodities including wheat, vegetable oil and sugar.
GLOBAL OIL PRICES: Since the beginning of 2020, crude oil prices slumped dramatically following the ‘Russia–Saudi Arabia oil price war’ in March 2020 and the decline in consumer demand with the spread of the COVID-19 pandemic, further impacting the global economy. According to global forecasts, the full recovery of oil demand levels may not take place until 2022. However, the news of a successful coronavirus vaccine impacted the oil market again with the price of crude oil moving up to more than 20 percent in a month to hover close to 50 USD per barrel. Despite rising oil price forecasts in early 2021, experts still expect a downward oil price at the beginning of the second quarter of 2021, when global oil production is forecasted to rise and cause inventories to draw up slower. During the weeks from 11 to 25 January 2021, the WTI prices slightly increased from 52.15 USD per barrel to 52.78 USD per barrel, while Brent prices increased from 54.84 USD per barrel to 55.44 USD per barrel. As of 25 January, the WTI and Brent prices remained 13 percent and 6 percent higher, respectively, than March 2020 levels.